Crypto and the Challenge of Regulation
I study the regulation of cryptocurrency and the urgent need for a coherent policy framework. Emerging technologies like cryptocurrency often defy traditional regulatory categories, and attempts to regulate them with without outdated laws frequently exceed statutory authority. With a multitude of competing stakeholders—entrepreneurs, financial incumbents, law enforcement, and consumers eager to use the technology—the US Congress has struggled to update the laws in a meaningful way.
George Stigler, the Nobel Prize–winning economist and leading figure in the Chicago School of Economics known for describing “regulatory capture”, observed in his 1963 “Public Regulation of the Securities Market” and later in the seminal “The Theory of Economic Regulation” that regulatory agencies often serve the interests of the industries they oversee rather than the public. Stigler critiqued the Securities and Exchange Commission (SEC), noting that its rules and enforcement frequently favored established players instead of protecting investors.
A striking example of regulatory capture in the crypto space was the SEC’s lawsuit against Ripple Labs Inc. over XRP, one of the largest and most widely used cryptocurrencies. In December 2020, the SEC filed a complaint alleging that Ripple had conducted an unregistered securities offering, claiming that XRP should have been registered under federal securities laws. XRP is a digital asset used for fast, low-cost cross-border payments and liquidity provision.
The lawsuit created enormous uncertainty for Ripple and the broader crypto market. Legal costs and regulatory pressure posed serious challenges to the company. After nearly three years of litigation, in July 2023, Ripple reached a settlement with the SEC that allowed it to continue operating XRP, with certain compliance measures. The case also saw intervention from XRP users—the so-called “XRP Army”—who filed a class action to assert their interest in accessing the technology, highlighting widespread public demand for blockchain innovation even amid regulatory scrutiny.
I own no cryptocurrency, but I study the industry as a textbook example of the perils of policy—both overreach and absence—and the consequences this has for innovation and consumer access.
I study the regulation of cryptocurrency and the urgent need for a coherent policy framework. Emerging technologies like cryptocurrency often defy traditional regulatory categories, and attempts to regulate them with…
The first piece of legislation to regulate cryptocurrencies in the United States is now law. The bipartisan passage of the Guiding and Empowering Nation-based Innovation Using Stablecoins Act of 2025—better…
The 2024 U.S. presidential election and recent judicial decisions have prompted a reevaluation of administrative authority within federal agencies. Recent U.S. Supreme Court decisions have signaled limits to regulatory overreach,…
On August 8, Judge Analisa Torres of the U.S. Southern District of New York issued her judgment on the case brought by the Securities and Exchange Commission against the blockchain…
Following the Securities and Exchange Commission’s effort to stretch, bend and twist the law to grant itself authority to regulate cryptocurrencies has been like watching an exhausting video game. By…
Securities and Exchange Commission (SEC) Chairmen of both parties, Jay Clayton and Gary Gensler, have asserted regulatory power over digital assets and blockchain. They pursued a ruinous “regulation by enforcement”…
Over the last two U.S. administrations, the U.S. Securities and Exchange Commission (SEC) has promoted an all-encompassing policy of “regulation by enforcement” for U.S.-based digital asset markets like Coinbase and…
After three years, the cryptocurrency case of the century — SEC v. Ripple — ended victoriously for the people the U.S. government is supposed to protect: consumers and small investors….
In February, I filed a motion to intervene in SEC v. Ripple Labs, the first big crypto enforcement action filed in December 2020 by the Securities and Exchange Commission (SEC)….
As the cryptocurrency trial of the century draws to an close in a Manhattan federal court, there are increasing signs that the U.S. Securities and Exchange Commission (SEC) faces a…
By law, regulatory agencies should only regulate that which they have authority to regulate. Deference is allowed to some degree, should the agency’s justification be reasonable and ideally evidenced. Notably…
Four years ago this week, Security Exchange Commission’s (SEC) Director of Corporation Finance William Hinman detailed a vision for regulating digital assets. The speech was a bait and switch. It…